Genesis Global Capital, a cryptocurrency lender, is getting ready in case it decides to seek bankruptcy proceedings, according to a Wednesday report from Bloomberg.
According to the article, which relied on sources with knowledge of the situation, a filing may occur as soon as this week. As it struggles with a cash constraint, the division of crypto behemoth Digital Currency Group, or DCG, has been in private discussions with creditor organizations. Plans may alter as a result of ongoing negotiations with creditors, according to the article.
The Financial Times said last week that Genesis has its creditors more than $3 billion. As FTX and Three Arrows Capital, Sam Bankman-bitcoin Fried's exchange and hedge fund, failed, DCG has been attempting to fix its financial issues. The FT had previously disclosed that DCG might generate money by selling investments in its startup portfolio.
Following the collapse of FTX, Genesis stopped redemptions in November and stated at the time that bankruptcy was a possibility unless new capital could be raised.
Its lending partnership Gemini, a cryptocurrency exchange founded by Cameron and Tyler Winklevoss, has been affected by the instability at Genesis.
Due to the more than $900 million in client assets still in Genesis, Gemini was forced to cease withdrawal from its interest-bearing Earn program in November. Users might receive a yield by borrowing their coins via Genesis thru Gemini's Earn programme.
DCG, the parent business, has been looking elsewhere for funding in the meanwhile. As Genesis works to stay afloat, it intends to stop paying out quarterly dividends in order to save money.
DCG stated that it is “strengthening our balance sheet by cutting operating costs and conserving liquidity” in a letter addressed to shareholders that was obtained by Bloomberg on Tuesday.
Earlier in 2022, Genesis witnessed the default of its $2.4 billion loan to the hedge firm Three Arrows Capital after Three Arrows failed as a result of its investment in the Terra network, whose stablecoin and token saw a sharp decrease in value.
CoinDesk's parent organization is also DCG.
Genesis Trading fires 30% of its employees.
According to a source with access to the situation, Genesis Trading, the troubled crypto lending division of Barry Silbert's Digital Currency Group, has reduced its staff by 30% as a result of growing pressure from its creditors and the impending possibility of bankruptcy.
20% of Genesis' workers had previously been let go, and the CEO was changed in 2017. The Grayscale Bitcoin Trust is a part of Silbert's crypto conglomerate. (GBTC) and mining firm Foundry were impacted by the 2022 market turbulence and the collapse of cryptocurrency hedge fund Three Arrows Capital.
The source, who wished to remain anonymous since the figures are private, claimed that about 60 positions had been cut. Currently, the business employs about 145 people. One day after telling customers that Genesis needed extra time to resolve its financial crisis, interim CEO Derar Islim announced the latest cut.
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